Discount on B2B, But Not Too Much

Cable business-services marketers here cautioned that promotional offers will get some customers in the door, but cutting prices too deeply can have an unintended effect.

“Offers are the hook,” Suddenlink Communications vice president of marketing Beverly Gambell said during a panel session at CTAM Summit ’09. She added that cable companies would be smart to use the current state of the economy to their advantage.

“Businesses are looking for ways to save money,” Gambell said. “Offers should be simple, complete and aligned across various sales channels.”

But there is a fine line to tread when making promotional offers to the business community, she said. Promotions should offer a demonstrable savings, but going too extreme could be disaster.

“If you’re too cheap, they might think you don’t have a reliable product,” Gambell said. Later, she added that pricing discounts of 10% to 20% have been successful in getting small businesses to switch from their business provider, but when they hit 30% to 40%, take rates stopped and even declined in some cases.

Cablevision Systems vice president of commercial markets Stephanie Anderson said that keeping the marketing message simple also is a key factor in success. She added that it is especially true for small businesses, which tend to stick with a provider if the service is working. She estimated that the average small business churn for a PBX phone system is 84 months, meaning that customers won’t switch unless the offer is extremely compelling.

Anderson said Cablevision has kept it simple in its print and TV ads: A print campaign that simply spells out how much the service costs (“$59.90 for voice and data, That’s It”) has resonated with customers, as have TV spots that specifically compare the Optimum business package with Verizon Communications.

Cablevision put those spots on broadcast TV in New York and New Jersey to counter a Verizon campaign that was specifically targeting the MSO’s customers. She said the company’s decision to put the spots – which pointed out hidden charges and inferior service from the RBOC — on broadcast TV also had a halo effect on residential customers.

“People thought if they [Verizon] are doing that on the business side, what are they doing on the residential side?” Anderson said.

Cox Business director of commercial marketing strategy Murray Goldstein said calling out the RBOC competitor specifically in your marketing materials is tricky. On one hand, RBOCs have definitely taken notice of cable’s competitive threat in business-to-business and are addressing it.

“There is nothing better than when your competitor is calling you out; it’s free publicity,” Goldstein said adding that any response has to be “straight forward, factual” and be careful not to “alienate the people you’re trying to focus on in the first place.”

To that extent, Comcast Business vice president of marketing Corey Eng said his company limits directly naming competitors to its direct mail pieces.